Indiana is implementing a series of reforms to its Medicaid program, specifically targeting the rapid growth and reported improper payments within the Applied Behavioral Analysis (ABA) therapy for children with autism. Governor Mike Braun's administration has initiated these changes to protect Medicaid dollars intended for vulnerable children and families from fraud, waste, inflated billing, and care that was not properly delivered. The state aims to safeguard these funds to ensure honest providers are not undercut, taxpayers are not overcharged, and the families relying on Medicaid receive necessary services.
Applied behavioral analysis (ABA) is a therapy that can assist children with autism in developing crucial communication, social, and daily living skills. While it offers life-changing benefits for many families, its rapid spending growth in Indiana prompted a closer look. According to the Indiana Family and Social Services Administration, annual Medicaid spending on ABA surged from approximately $17 million in the program’s early years to $611 million in 2023.
This significant increase, while not in itself proof of wrongdoing, demanded scrutiny. The Department of Health and Human Services inspector general reviewed a sample of claims, finding that all 100 sampled enrollee-months contained at least one claim line that was identified as improper or potentially improper. Auditors further estimated that Indiana made at least $56 million in improper fee-for-service payments during 2019 and 2020 alone. An "improper" payment, as defined, is one that should not have been made or was made in the wrong amount; while not all are fraudulent, they create vulnerabilities for deliberate abuse and put dollars intended for vulnerable children at risk when the state cannot verify service delivery, medical necessity, or even if the service occurred as billed.
In response, Governor Braun convened families, clinicians, educators, and providers to gather firsthand insights on how to strengthen oversight and rein in spending without compromising care. The state subsequently translated these recommendations into targeted safeguards.
One of the initial changes addresses basic accountability for ABA providers. Previously, accreditation was not a requirement. Now, agencies must begin the accreditation process, with full accreditation mandated by October 2027. To manage program growth and quality, Indiana also secured federal approval for a temporary moratorium on new ABA agency enrollments and changes of ownership, though exceptions are made for underserved areas to maintain access to care.
Strengthening clinical oversight was another key reform. Under the new rules, registered behavior technicians must now receive at least one hour of supervision from a qualified clinician for every eight hours of technician-driven therapy. This measure aims to ensure a higher standard of care and professional guidance.
The administration also moved to close common-sense loopholes in billing practices. Providers can no longer bill Medicaid for telehealth services when the treatment requires direct, in-person observation. This clarifies that a video call is not an adequate substitute for treatments necessitating a provider's physical presence, ensuring children receive appropriate care and taxpayers are not billed for inadequate services.
Beyond direct oversight, the state also tackled underlying financial incentives. Reforms include reducing maximum fees for individual therapy, requiring billing modifiers that clearly identify provider credentials, and establishing group-payment tiers based on the size of the group receiving therapy. The overarching goal, according to the state, is to shift towards paying for results and outcomes for children, rather than simply the volume of billable hours.
Indiana's experience and reforms are reflective of a broader national challenge. National Medicaid and Children’s Health Insurance Program spending on ABA therapy saw a significant increase of 421% between 2021 and 2025. This explosive growth has prompted the Centers for Medicare and Medicaid Services (CMS) to develop a new ABA toolkit designed to assist states in strengthening oversight and protecting care. This toolkit provides practical guidance on provider qualifications, supervision, payment structures, utilization review, enrollment processes, and fraud prevention.
The federal guidance reinforces Indiana’s approach, demonstrating that states can effectively protect access to critical ABA therapy while simultaneously demanding greater accountability from the programs and providers offering these services. The state emphasizes that fiscal discipline is essential for sustaining compassionate care, suggesting that other states could benefit from following Indiana's model to prevent further loss of taxpayer dollars and ensure families receive the services Medicaid was designed to provide.
